Geeli Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Geeli Case Solution

OPPORTUNITIES

There are certain opportunities in Chinese market as there is a significant growth in trade surplus and it is expected that it would result in the appreciation of RMB Yuan. Moreover, domestic demand is expected to increase as the Chinese economy is improving and the income per capital is also increasing which results in the strong flows of foreign direct investment in to the Chinese market.
In addition to this, the total market capitalization achieved a significant growth within a short time which is a positive sign for both local and foreign investors. Almost each sector in Chinese market is growing due to overall increase in the GDP of the country, therefore both local and foreign investors have diversified portfolio of emerging markets in order to invest; an example of this could be that the investors could invest in energy sector, chemical industry, agriculture industry, forestry and fishing, technology industry and insurance and bank industry.

CHALLENGES

It is expected that along with the opportunities there are different challenges that both local and foreign investors could face while operating in China. Law and reinforcement conditions are poor in China, which results in governing business disputes. Moreover, there are many problematic factors such as corruption, limited access to funds and limited access to class shares, which could create challenges for both local and foreign investors.

Evaluation of the Expansion Plan

The management of the company is considering an expansion plan in order to increase its production facilities and it is expected that based upon the past experiences, this expansion plan would help the company to become the largest manufacturer of air conditioned.
U.S Investors

Chinese economy is the most growing and potential market with respect to all investors. It is expected that there is a significant potential of growth, therefore it will send a strong signal towards the U.S investors, who are valuing Geeli for a potential investment. The past financial performance of the company is also good, which means there is a significant potential of future growth and it is expected that the expansion plan of the company will provide greater returns to its investors.
Moreover, the expansion plan is generating positive net present value and increasing the wealth of the company by $624322 by using the discount rate of 17%, which means that the project is generating more return as compared to US investor’s prospects related to risk, therefore expansion plan is financially feasible for US investors.

Chinese Investors

It is e expected that Chinese government is facilitating local investors by providing subsidies and special therefore, local investors have clear edge over foreign investors and they are facing less risk as compared to foreign investors. In addition to this, Chinese investors have greater access to local markets and it is expected that Chinese investors have greater information of the company as compared to foreign investors which is again a plus point for local investors. Moreover, Chinese investors could attain debt on more easy terms as compared to foreign investors.....................

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